Xiaomi founder expects EV arm to turn profitable after new SUV

BEIJING: Xiaomi Corp. founder Lei Jun expects its year-old EV business to turn profitable in the second half, a milestone for the billionaire's US$10 billion (RM43bil) endeavour in a cut-throat market.

Lei delivered his forecast during a Tuesday investor event without specifying the type of profit. His company has enjoyed strong sales of its SU7 sedan since its launch a year ago, which helped narrow losses in that division in recent quarters.

Lei is conveying confidence days after the country's biggest EV maker BYD Co. announced sweeping price cuts, threatening to escalate an already pitched battle between Tesla Inc. and rivals in the world's largest automotive arena.

A Xiaomi spokesman confirmed Lei's comments after the event.

In a commentary on Sunday, the People's Daily - the mouthpiece of China's Communist Party - criticised "rat-race competition" and warned that price wars can seriously affect supply-chain security.

Low-priced and low-quality products seriously damage the international reputation of "Made-in-China," it said, without naming companies.

Last month, Beijing-based Xiaomi outlined plans for its first SUV - the YU7 - showcasing ambitions to expand its portfolio and move past a much-publicised accident that cast doubt on its vehicular expertise. That model's expected to hit the market as early as July.

The company posted a loss of 700 million yuan (RM414mil) from its EV division in the fourth quarter. That narrowed to 500 million yuan (RM295mil) last quarter.

Still, it's unlikely that Xiaomi will soon recoup its giant investment in the EV business, which Lei has called his final endeavour as an entrepreneur.

Smartphones and appliances remain the cash cow for the company, which reported better-than-anticipated revenue for the March quarter.